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When it comes to smart investments, real estate is usually a safe bet. Though both commercial and residential properties can be excellent opportunities, commercial properties tend to offer a bigger financial payoff than single-family homes and rental apartments do. But that’s not the only advantage they have over residential properties. Before you begin looking for real estate lenders, read more about the benefits of investing in commercial property.

What Qualifies as a Commercial Property?

There are many different types of commercial properties. They include:

• Retail buildings
• Offices
• Warehouses
• Industrial buildings
• Mixed-use buildings, which have a mix of retail, office, and apartment space.
• Apartment buildings
• Self-Storage Complexes

Each of these properties comes with its own unique needs and management techniques. Keep reading to learn about some of the benefits you may experience if you invest in any of the above types of commercial property.

Higher Income Potential

One of the biggest reasons to invest in commercial real estate over residential is the higher earning potential. Typically, commercial properties have between a 6 and 12 percent annual return on the purchase price. Compare this to the annual return for single-family homes, which is usually between 1 and 4 percent. The exact ROI you can expect will largely depend on where your property is located and what kind of business you rent it out to.

More Professional Relationship Between Landlord and Tenant

Commercial properties aren’t usually owned by individual people, but instead are often owned by LLCs. Because of this, they typically operate their property as a business. Their spaces are also rented out by businesses who take pride in their work and want to do what’s best for their company. The relationship between the landlord and tenant, in this case, is a business-to-business relationship. This ensures that all interactions courteous and professional.

Better Maintenance

Business owners have a unique interest in keeping their places of business clean and maintained, both inside and out. If they don’t, it would negatively affect their business. As a landlord, it’s good to have a tenant who is as invested in maintaining the quality of the property as you are. Your interests are aligned with your tenants, which makes securing the property and your investment in it much simpler.

Set Hours of Operation

In general, businesses are only open for a set period of time during the day. Their hours of operation match your own. This means that you won’t have to worry about calls in the middle of the night from tenants who lost their keys or need a repair. The only calls you may receive during off-hours will be few and may only happen during an emergency, such as a break-in or fire.

Triple Net Leases

This is a common type of lease used for commercial properties. With a triple net lease, the property owner doesn’t pay any expenses on the property, aside from the mortgage. Instead, the lessee handles all expenses directly, including the real estate taxes. Large businesses usually use this type of lease in order to maintain the look and feel that their brand is known for. This type of low-maintenance contract is only applicable to commercial properties; you can’t use them with a residential property.

To learn more about investing in commercial property, contact us at Investor Loan Source today!

Real estate investing can turn a substantial return when investors understand market trends and demographics and have a good understanding of what will make a good investment property. Investing in real estate requires capital, which is not always readily available, especially when you’re beginning the investment process.

Fortunately, there are different ways you can obtain this capital. Two popular methods for obtaining investment funds are with crowdfunding and hard money loans. Here’s what you need to know about these two methods of obtaining capital.

Basics of Crowdfunding

Crowdfunding requires the investor to raise money in different amounts from a number of people. This can include funds from family and friends, but for real estate investing it usually involves soliciting funds from numerous accredited investors on the internet. These accredited investors are dedicated to the real estate world and understand property values.

To be accredited, they meet certain income requirements and have a minimum net worth value, depending on the crowdfunding campaign. The funds raised in the campaign are used like any other capital to purchase and build value in real estate. The loan from crowdfunding may or may not be secured.

Basics of Hard Money Lending

Hard money lending is a short-term loan that’s secured by the purchaser’s real estate. This type of loan differs from loans typically offered by banks because it’s quicker to obtain than a typical loan and has fewer qualification criteria as well. Since property is used as collateral, the value will help determine how much capital you can obtain as well as the interest rate that’s charge for the life of the loan. Only a certain percentage of the property’s value can be given out as a loan. Hard money loans are easier to obtain because credit history typically doesn’t factor into the lending process.

Pros and Cons of Crowdfunding

One of the most obvious benefits of crowdfunding is the ability to contact numerous investors online. That means you’ll get a lot of feedback and the potential for funds if they agree with your concept and feel like it has the potential for a big return. You can save time pitching your idea to numerous investors at the same time instead of approaching lenders individually. You’ll also have the ability to promote your campaign on social media when using crowdfunding sites.

The downside of crowdfunding is that there may be a large minimum to participate on the platform, so it may be difficult to raise money for smaller projects. In addition, it may take a good portion of the year to find funding for your project, or you may not end up securing funding at all.

Pros and Cons of Hard Money Loans

Hard money loans are beneficial because you can obtain loans of differing values, whether you’re a first-time investor looking for a small loan or are experienced and looking to finance a large-scale project. Unlike the impersonal nature of crowdfunding, hard money loans make it possible for you to build a relationship with a lender so that you can get loans quickly later on. Hard money loans are also a fast way to get capital.

It’s important to note that hard money loans carry a higher interest rate because they’re short-term (usually only a year or two) with the assumption that you’ll be selling your investment for a profit rather quickly. For more information about hard money loans, contact Investor Loan Source today.

Investing in real estate is an attractive option for new and old investors alike. However, no matter where you fall experience-wise in investing, it’s crucial that you go into real estate investment understanding a few important factors. If you’ve been presented with a new opportunity for real estate investing, here are some things you should be sure to consider first.

Timeline

An important thing to remember in real estate investing is that the process can sometimes take some time, so be realistic about when to expect a return. The purpose of your investment is to build your portfolio and increase your cash flow, so if you need to do that quickly make sure you’re not investing in a property that will take too long to see a return.

The due-diligence phase itself can take months rather than days, and if renovation is involved, you’ll need to factor in the time to do that properly as well. It can take months or even years to get specific building permits, so when you’re considering your investment be aware of time frames for city and other government approvals that may be needed.

Location

The location of a real estate investment property is another crucial factor. No matter how incredible the property ends up being, if the location is undesirable it will be extremely difficult to make a good return. Areas with high crime rates or no commercial prospects will be difficult to sell or lease.

It’s also important to consider the trends and demographics of the area where the property is located. Do your homework about the area and talk to local agencies to make sure you understand the civil engineering and environmental limitations or requirements of the area.

Market Trends

A good investor knows the market trends and takes advantage of them accordingly. Make sure you understand fundamentals like vacancy, rent, competition for home sales, and more to make sure you’ll get a high return on your investment. Understanding the market makes it easier for you to diversify your portfolio and quickly identify good potential investments.

Pay attention to indications of recession or other economic downturn, because this substantially impacts how quickly you’ll be able to make a return on your investment, whether you plan to lease your property or flip it and sell. Make sure the properties you consider will be able to survive downturns so that you can recover more quickly.

Property Value and Type

It’s important to remember that even after considering the market trends and demographics of an area, not all properties will be valued the same in an area simply because of the type of property. Some areas may be hotter for residential sales while others will be better for commercial. Make sure the property you’re considering isn’t overpriced and that risks are low for that type of property.

Current Financial Health

Very few real estate investments have a guaranteed return, so it’s important to be cautious financially and take into account your current financial health. Don’t stake everything you have or take out loans that you’re not certain you can recoup or pay back. If you are short on capital and want to take out a loan, make sure you understand all the terms and find a lender who specializes in the type of loan you need. Contact Investor Loan Source today to learn about the different loan options available for your investment.

Hard money loans are a great way to get into the world of real estate investments. These loans don’t have as stringent of income or credit score requirements, so they’re a great option for many borrowers. However, the duration term is much shorter than conventional loans and hard money loans usually have higher interest rates as well. That’s why it’s important that you have exit strategies in mind to pay off the loan when necessary before you take out a hard money loan. Here are some hard money loan exit strategies you may want to consider.

Sell the Property

One of the most common exit strategies for hard money loans is to sell the property. This is a common option because many borrowers using hard money loans in Texas do so with the purpose of purchasing a property, improving it, and selling it for a profit. Most borrowers are able to use the loan for costs associated with renovating or rehabilitating the property, so it’s generally not too difficult to pay off the loan this way. This strategy is only successful if the borrower has planned and has the investment knowledge and expertise to know which properties can maximize profit. Some lenders may offer an extension of the loan if the renovations aren’t complete before the property needs to be sold.

Refinance

If the investor’s plan wasn’t to flip a property but to use it for a rental property, refinancing is a good option. Since this strategy will provide a longer-term stream of income rather than one lump sum, refinancing with a traditional lender can ensure the original loan is paid off. Hard money loans can also be used as a bridge between applying for and being approved for another loan that you intend to use for a longer period of time.

Get New Loan

You may also be able to get an additional hard money loan, but this is usually only recommended when all other options have been exhausted. This is simply because using another hard money loan diverts it from the purpose that it was originally intended for, but it can help you buy some time or avoid foreclosure.

Traditional Mortgage

If your plan is to stay in the property purchased with a hard money loan, a great exit strategy is to secure a traditional mortgage. A hard money loan can allow you time to build up credit or pay down debts to lower your debt-to-income ratio. You can use the 1-3 year time period of a hard money loan to raise your chances of getting a traditional mortgage.

Subprime Mortgage

If you’re unable to qualify for a traditional mortgage, you can consider a subprime mortgage. Although the terms aren’t as favorable as a traditional mortgage, it can provide the funds to exit the hard money loan and provide long-term financing for the property, whether you’re planning to use it yourself or rent it out.

Use Business Capital

Finally, consider using business capital to exit your hard money loan. This can be income from other properties, other investors you have, or your business. A hard money loan can help you buy time to find this capital or to locate other investors.

Whatever exit strategy you intend to use, make sure you have backup plans to prevent defaulting on your loan. To learn more about hard money loans and exit strategies, contact Investor Loan Source today.

There’s no doubt that commercial lending practices have become more regimented since 2008, since lenders must take additional steps to protect themselves from losses by evaluating the credit worthiness of commercial borrowers. This enhanced focus on the credit worthiness of borrowers and their loan requests has in some ways restricted lending, but it represents a necessary means of stabilizing the lending landscape.

Commercial real estate loans have not been immune to these more rigorous standards for commercial lending. When it comes to commercial financing, real estate in Texas can still be financed so long as borrowers make sure to keep the 5 C’s of commercial credit in order. While many reference the 5 C’s when speaking of credit in general, they also apply to the narrower field of commercial real estate lending, since the premises are sound regardless of the context. Keep reading to learn more about the 5 C’s of commercial real estate lending and how they may impact your future requests for financing.

Character

Character is a somewhat subjective consideration, as it refers to the character of the borrower as discerned by the lender. The criteria for credit-worthy character can vary from lender to lender, but there are a few waypoints that lenders may use to assess the character of a potential borrower. Those criteria include credit history, employment or business history, past interactions with other lenders, reputation, references, and credentials.

This first C makes a good case for always meeting the terms of your financial transactions and contracts while also paying special attention to business relationships and personal interactions with others.

Capacity

Capacity is sometimes referred to with another C, cash flow. It refers to your ability to repay the loan. Lenders want to see that you have not only a plan for making the numbers add up so that your debt is repaid, but that you also have the income to realistically pay back the loan.

In the case of real estate lending, there may be some documentation required that demonstrates your net assets, your monthly and annual income, debt and liquidity statements, and other property assets that indicate you have the ability to pay the loan back in the required timeframe.

Capital

Many lenders feel more confident about lending to borrowers who are willing to put some “skin in the game,” so to speak. In other words, lenders will often require that borrowers make a significant capital investment in the venture they wish to finance. In the case of real estate transactions, you may be required to invest at least 20% of the appraised value of the property through capital. That capital can come from personal savings, profits generated from previous real estate transactions, or other business revenues.

Condition

The condition of your business or the property to be purchased is another C that lenders weigh into the decision regarding your loan request. In terms of a business loan, lenders will want to see revenue sheets, market conditions, and competitor success rates. In a real estate transaction, the condition of the property will be assessed.

For example, in a hard money loan evaluation, the property to be purchased is the collateral for the transaction. Therefore, the lender will physically inspect the property to determine its condition and attach a reasonable value to it.

Collateral

Collateral is particularly important in lending for real estate purchases because the amounts borrowed can be significant. Collateral is the physical property or assets that the borrower offers as a guarantee that the borrowed funds will be repaid. If the borrower can’t pay back the loan, the collateral can be offered as a form of repayment to the lender. In many real estate transactions, the purchased property can act as collateral, so that if the loan can’t be repaid the real estate serves as a guarantee.

If you are planning to finance your next commercial real estate purchase, make sure that you’ve considered the 5 C’s of commercial lending and how you match up against them. To learn more about the 5 C’s, contact Investor Loan Source at (409) 735-6267.

“Transitional property” is a newly coined term for something that’s been around for ages. It poses bigger risks than typical properties, but its return on investment is better.

What Qualifies as a Transitional Property?

It’s a structure or piece of land that’s changing from one type of real estate to another. Some examples include an old townhouse that’s being transformed into an office space or a hunting ground being turned into a rice field. Interestingly, one of America’s most famous amusement parks, Disney World, was once a transitional property.

Residential buildings are usually transformed into business establishments because of commercialization. The ambient noise makes the place less desirable to live in, while new customers and high foot traffic bring in opportunities for local trade.

What Makes It a Good Investment?

The most valuable part of this real estate is the land. Its value rapidly increases as the area advances out of residential and into commercial zoning. That means you can sell the lot for a higher price over time and earn back the money you received from hard money lenders faster.

You can also construct other kinds of buildings if the existing one doesn’t fit your purpose. In addition, if the residential structures in the transitional property are well-maintained, they can make suitable rental investments.

How Do You Identify Investment-Worthy Buys?

While transitional properties are a good buy, not all make an excellent investment. You have to carefully study many things about the real estate you’re purchasing, including soil type, location, and existing commercial projects in the area. An urban developer and land expert can help you go through this.

Research your property market to identify which places are targeted for revitalization or gentrification. These will likely generate the most returns.

Who Can Help You Fund Its Acquisition and Development?

Converting these types of real estate isn’t easy. It’s also a bit costly. You need a substantial amount of capital to fund a property’s acquisition, renovation, and total transformation if you’re planning to convert it into something else.

Bridge financing and hard money lending have been popular options for buyers who need quick funding to secure a deal. These loans are financed by private investors who see the value of a piece of real estate. When borrowing cash from them, be ready to explain how you’ll solve the property’s current issues and make a steady income out of it.

People with a bad credit history but considerable equity may still apply for a bridge or hard money loan. They may borrow cash for a short period until they qualify for refinancing.

How Do You Make Money?

Renting out a building is good business since it gives you a steady stream of income. However, keep in mind that the value of a transitional property eventually increases. That means you can make more money by selling or converting that piece of real estate at the right time. It’s crucial to monitor the demand for commercial properties in the area, which dictates the land’s appreciation value.

Many agents are still careful when buying and selling transitional properties, and they’d rather stay on familiar ground. But, these lands and structures are an excellent investment since they’re extremely profitable. Working with experts who know the real estate market will help you land a good deal. Contact Investor Loan Source today to secure your hard money loans in Houston.

For many engaged in real estate investing, hard money loans, also known as bridge loans, can be a helpful tool in financing transactions quickly and efficiently without the need for an extensive approval process. That’s because the loan approval is not based on the credit worthiness of the borrower, but rather the appraised value of the property the loan is being used to purchase. In other words, the property serves as a kind of collateral.

There are many reputable hard money lenders for real estate investors in Texas, but that doesn’t mean there aren’t a fair share of nefarious entities offering hard money loan opportunities. However, engaging in a hard money loan with a disreputable lender can lead to considerable strife for an investor. Therefore, it’s important that when seeking hard money loans that investors arm themselves with knowledge and learn to separate the legitimate hard money loan opportunities from the scams. Keep reading for a few tips that you can use to avoid some of the more common hard money lender scams being perpetrated today.

No Property Evaluation Required

The entire premise of a hard money loan is that the property you plan to buy with it serves as collateral for your loan amount. The loan amount itself is based on the value of the property, so you should immediately be suspicious of any hard money lender that offers approval without first evaluating the property.

This doesn’t just mean that the lender reviewed an appraisal. A legitimate lender will want to physically visit the property to perform a detailed assessment. If you can get approval over the phone for property that the lender has never seen, avoid that lender.

Upfront Fee Scams

Another sign that a hard money lender may be questionable is if there’s a request for a large upfront fee before the proper procedure is performed. Hard money loans follow a specific set of steps, and any deviation, including a sizable upfront fee, can be a sign of a scam. Fake lenders will sometimes call these upfront fees by another name such as an underwriter fee or administrative fee.

Legitimate lenders sometimes also request a fee early in the process, but those fees are generally not expensive and are usually in place to protect the lender if the borrower backs out at a later stage.

Full Funding Guarantee

Another tactic sometimes used by fake lenders is guaranteed funding of 100% of the property cost in exchange for a high fee. In other words, the lender will tell the borrower that the full cost of the property can be funded if the borrower agrees to paying a high fee. Most hard money lenders will only fund a loan equivalent to 60-70% of the appraised value of the property, so if a full funding guarantee is made contingent upon payment of a fee, you should avoid that lender.

Uncharacteristically Low Rates

It’s not unusual for hard money lenders to charge rates in excess of the bank rates for real estate loans. That’s because there is more risk inherent for the lender in a hard money loan, and because hard money loans are meant to serve as short-term funding sources for real estate investments. Therefore, when a hard money lender lures a borrower in with artificially low rates, there’s problem a scam afoot. If the rates offered by a hard money lender dip well below 10%, that should be a sign that something is wrong.

Hard money loans can provide a tremendous rule for securing funding for real estate transactions quickly, but they aren’t without risks posed by fake lenders. To learn more about how to spot and avoid hard money lending scams, contact Investor Loan Source at (409) 735-6267.

There’s always a degree of risk in any investment. However, there is a tremendous upside in that you can make great gains with a little savvy, research, knowledge, and good luck. Commercial real estate investment can offer one of the most reliable and lucrative types of real estate investment opportunities. Because of that, commercial real estate financing is readily available that can help wise investors take advantage of can’t-miss opportunities when they present themselves.

But reaping a windfall in commercial real estate involves more than just luck and available financing. There are some factors in the success of a commercial real estate investment that are within the scope of the average investor and can dramatically impact the return that is realized. Once you have commercial financing, real estate in Texas can provide you with a tremendous investment opportunity if you stack the deck in your favor. Make sure you take the following steps to maximize the success of your investment and reap the greatest rewards for your portfolio.

Follow Demand

When large national chains look to expand into new markets, one of the first things they do is look at the real estate utilized by their direct competitors. That’s why in many markets, you’ll see large box home improvement stores located right across the street from one another, or fast food franchises covering all four corners of the same intersection. The reason is simple to understand from a business perspective. Why replicate market research when your competitor has already done the work for you? Your competitor’s customers are your customers as well. When selecting a commercial investment, you can take a similar approach. Look for areas of town which are seeing booms in commercial development. If three retail strip malls have recently gone up in a one mile stretch of a bustling thoroughfare and are at capacity, there’s a good bet that the spot is well-suited for similar commercial development. Look for hot spots and find investment opportunities that are adjacent to them, but also be wary of market saturation.

Look for Multi-Use Zoning

Local zoning guidelines will limit what types of vendors or services can use your commercial space, so it’s important to try to find real estate that is zoned for multi-use. By investing in multi-use property, you’re giving yourself the widest possible tenant base and creating a wealth of options when it comes to filling your square footage with paying tenants. Diversity is a good thing when it comes to commercial real estate because it allows you to be flexible and pivot to meet the changing demand.

Examine the Norms

Again, you can learn a lot from others who are investing in commercial real estate alongside you, and it’s wise to use that knowledge when selecting and developing properties. Just as it’s a good idea to follow the demand when it comes to location, you should also find out what the norm is for space demands. For example, if there’s a lot of activity in the market for 10,000 square foot retail spaces, it wouldn’t necessarily make sense to invest in several 40,000 square foot spaces that may sit empty because they don’t meet the market need. Even the best location won’t maximize your investment if your property sits empty because it doesn’t reflect the local demand.

Use a Commercial Real Estate Broker

While many investors think they can save money by going it alone on commercial real estate selection, it’s a good idea to get an experienced commercial real estate broker involved in your investment transactions. Even if you think you have a firm handle on the market, a broker can provide you with expert advice, provide you with informed speculation about the direction the market may be going, and help with site selection. The money you spend to hire a commercial real estate broker is well worth it, so consider bringing a broker on board for your investment transactions.

By using these tips, you can create lucrative commercial real estate investments that will pay you dividends and strengthen your portfolio. To learn more about some of the things you can do to maximize your return on commercial real estate investments, contact Investor Loan Source at (409) 735-6267.

There are numerous ways to make a big profit in real estate, whether you’re planning to flip homes, purchase more rental properties, or sell rental properties to tenants. However, you need a good amount of capital to do this, so it’s important to know which loans will best meet your needs. Investment lenders in Texas offer both fixed and variable rates on investment loans, so it’s important for you to know about each type to ensure you make the smartest choice. Here’s what you need to know.

Variable vs. Fixed Rates

A fixed rate loan means that you’ll lock in an interest rate that will continue for the life of the loan. Conversely, a variable rate loan has an interest rate that adjusts over time depending on the market trends. Since a fixed rate loan has the interest calculated on the principal at the same rate, the overall payment over the life of the loan never changes. The payment on a variable rate loan will change over time because the amount of interest will change as well. There are some benefits of each type of loan that you, as an investor, should consider.

How Variable Loans Work

A variable loan rate is calculated using a well-known index like the Prime Rate or LIBOR. Typically, a variable loan will be the index rate plus an additional percentage. This additional percentage will depend on your credit score. The better the score is, the smaller the additional margin is. Riskier loans or those with a lower credit score will be give a higher margin by investment lenders. Loans that have a shorter payback term also have higher rates. The payment amount can change monthly depending on the interest rate change because the change in rate changes how much will be owed over the life of the loan.

Variable Loan Cap

It’s important to understand that there’s a cap on a variable loan amount. This is to protect borrowers regardless of how high the index rate goes. The caps are generally set at a higher amount than any borrower would want to pay, but it can be significantly lower than if the rates were to go considerably higher. So the borrower always knows the maximum they’ll have to pay, even with a variable rate.

Fixed Rate Pros and Cons

Perhaps the biggest benefit of a fixed rate loan is that you’ll always know how much your payment will be, regardless of what the market does. These standardized, monthly payments make it easy to work within your set budget without worrying about what the next payment amount might be. It’s a much safer loan for those who don’t want to gamble on market fluctuations. The downside of this type of loan is that you might pay a higher rate than a variable loan.

Variable Rate Pros and Cons

Variable rates almost always start out with a lower interest rate than a fixed rate loan does. This is because it’s a riskier loan, so lenders make it attractive by offering lower interest rates. But this can work well for a borrower or investor who plans to pay off the loan quickly. The obvious downside is the potential for rates to go higher than that of a fixed rate loan.

Deciding on a Loan

As you’ve probably learned, unique situations dictate which type of loan is best. That’s why after carefully considering both types of loans, you should contact Investor Loan Source to learn more and decide what’s best for you.

Loan-to-value ratios are an important metric for investor real estate loans in Texas and other states. LTVs determine the amount of the loan by comparing the value of the property involved. As a real estate investor, you need to be familiar with loan-to-value ratios. Here is a guide that will help you understand the basics.

What LTV Is

Loan-to-value ratios are used by investors like you and financial institutions when processing mortgages, investor loans, or refinancing to determine whether to go forward with a loan or not. The LTV can show lenders how much risk may be involved in the investment and show investors the amount of equity you will get from the involved property. Equity refers to how much of a property you own, which is expressed as a percentage on the loan. In essence, equity is the amount you would get if you sold your property minus the amount you need to spend repaying your loan.

A high loan-to-value ratio is an excellent investor loan source that can be used to define the specifications of real estate loans, mortgages, or refinancing options. LTVs are often viewed as a benchmark for how likely payments will be made. If the LTV is too high, there are ways the ratio can be lowered. The most common way to lower an LTV ratio for investor loans is to increase the down payment.

Calculating Loan-to-Value Ratios

The calculation for loan-to-value ratios is simple. You divide the amount of the loan by the purchase price of the property, then convert the sum to a percentage. You should look at how the value of a loan compares to the purchase price or appraisal value of the property. To get a better understanding of this process, use an LTV real estate calculator. This calculator lets you figure out the variables of a real estate investor loan and make note of all possible loan-to-value ratios.

What Makes a Good Loan-to-Value Ratio?

According to the calculations, the higher the LTV ratio, the more you will pay on the property, and the lower the LTV, the less you will pay. This means that a good LTV will have a lower ratio, and there will be more equity on the property. A higher LTV can still be good, though the interest rate may be higher as well. Overall, there isn’t a specific ratio that is good, per se, but there are limits and ranges you can use when considering a specific loan.

Conforming Loan-to-Value Ratios

A conforming LTV ratio is related to mortgages on personal properties, which is regulated by the Federal Housing Financing Agency. Conforming LTVs vary depending on the number of units in a residence. The ratio will be lower for non-owner-occupied properties and commercial properties (properties with more than four units).

Nonconforming Loan-to-Value Ratios

Nonconforming LTV ratios are used by private lenders who manage real estate loans online. These loans don’t conform to government guidelines. Nonconforming LTVs vary based on the investor’s credit score and the terms of the loan. Private lenders willingly take added risks by lending to investors with poor credit and high LTVs. In exchange, lenders receive higher interest rates on the loan.

Investor Loan Source can give you more insights on loan-to-value ratios. Visit us today at our Houston or El Campo, Texas locations, email us at [email protected], or call us at 409-735-6267.